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AidWatch 2011: Challenging Self-Interest Getting EU aid it for the fight against poverty

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1. Executive Summary

This year’s AidWatch report confirms that EU member states are off-track to meet their aid quantity and aid effectiveness commitments, and are increasingly prioritising self-interested aid policies that are relecting their own immediate security, migration and commercial interests. EU donors must now refocus and take the necessary steps to deliver on their international commitments towards partner countries. Opportunities in 2011 include notably the June European Council meeting and the 4th High Level Forum on Aid Effectiveness (HLF4) in Busan, South Korea.

On aid quantity pledges, igures by the OECD show that the EU has fallen far short of its collective 0.56% goal for 2010, with the gap amounting to nearly €15 billion. Overall, EU aid represented 0.43% of GNI in 2010. The bloc is now clearly off-target to reach 0.7% of GNI by 2015.
Figures show that three countries alone are responsible for more than three quarters of the €15 billion aid gap in 2010: Italy (responsible for 43.8% of the gap), Germany (26.4%) and Spain (6.4%).

As for the EU12, no single country (except for Cyprus) has managed to reach its interim target of 0.17% of GNI. The worst performers in 2010 include Latvia (fulfilling only 35% of its 2010 obligations), Romania (41%), Poland (49%), Slovak Republic (50%) and finally Bulgaria and Hungary (both fulfilling merely 53% of their 2010 obligations).

Our estimates show that EU member states reported approximately €5.2 billion of inflated aid in 2010 (debt cancellation, spending on student and refugee costs in donor countries). This is equivalent to almost 10% of the total aid provided to partner countries last year. €2.5 billion of this amount is debt cancellation, roughly €1.6 billion are student costs and about €1.1 billion are spent on refugees in donor countries.

Looking ahead towards 2015, EU aid is expected to grow much slower than what would be necessary to achieve the 0.7% ODA/GNI target set for 2015. According to projections and on current trends, the collective gap will widen every single year until 2015. Aid as a proportion of GNI is forecast to amount to a disappointing 0.45% in 2015, the final deadline for meeting the MDGs. Moreover, EU member states continue to report climate finance as ODA despite the urgent need to provide climate finance in addition to existing ODA commitments.

When it comes to aid quality, the HLF4 provides an opportunity for donor and partner countries to deepen and reaffirm their commitments to the types of aid reforms and practices committed to in Paris and Accra. Looking at the current political context, AidWatch members however fear that EU member states might press for a narrow donor-driven agenda, without taking into account the priorities of partner countries and the political and institutional changes needed to make aid effectiveness reforms successful.

This year’s report highlights particularly democratic ownership, aid transparency and gender as key areas where progress by the EU will be crucial. To ensure aid is more effective, EU donors must engage and better support Parliaments and CSOs, particularly in their role to hold governments to account; end all economic policy conditions; provide more transparent and better information on aid activities; and implementing the EU Gender Action Plan by providing the needed financial and human resources.